Enterasys retrial set for July 10

Published: June 5, 2007

The securities fraud trial of Jerry Shanahan, former chief operating officer of Enterasys Networks, has been moved to July 10 - a date set after Shanahan’s attorney asked the court to dismiss the case, charging his client’s right to a speedy trial had been violated.
The flurry of activity last week came after May 30, the day attorney Andrew Good said he was informed for the first time that federal prosecutors planned to retry his client on charges that a jury last December could not reach a verdict on.
Four other former Enterasys executives - including former CFO Robert Gagalis - are awaiting sentencing at the end of June after being convicted of using accounting tricks to fraudulently inflate revenue when Enterasys was being spun off from Cabletron Systems, a Rochester firm that was once New Hampshire’s largest employer.
But after the month-long trial and a week of deliberations, the jury acquitted Shanahan of one charge and couldn’t reach agreement on any others. Interviews with the jurors afterwards indicated that if it wasn’t for a single holdout, the jury would have acquitted Shanahan on most, if not all, of the charges.
In February, the court set a retrial date for Sept. 5, and many media outlets assumed that this meant that prosecutors had indeed decided to retry the case. But the court had set that date without any motion from the prosecutors, who would not tell reporters or Shanahan’s attorney whether an actual decision on pursuing a new trial had been made.
Good first tried to find out what prosecutors were up to on Dec. 27, eight days after the verdict, according to his affidavit. At the time, he was told prosecutors would try to make a decision in 10 days.
On Feb. 1, Good said, U.S. Deputy Attorney William Morse called him to tell him that court’s case manager also was trying to figure out what the government’s intentions were. Morse said that his office had made a decision, which he would not divulge, but in any case he was awaiting word from the Fraud Section of the U.S. Department of Justices in Washington, D.C.
Good tried to contact the fraud section urging the case be dismissed, but could not get an answer, according to his affidavit. Even as late as May 15, Good said, he tried to get an answer from prosecutors. At the time, he said, he was told that prosecutors were in Concord reviewing the record for the purposes of deciding whether there would be a retrial, but that Good was allegedly told, for “planning purposes,” to assume that the trial would be held in September.
Good told prosecutors the time frame violated the 70-day time limit of the Speedy Trial Act and wanted a decision on May 30. It was then, Good said, that he finally got a definitive answer that Shanahan would be retried.
Meanwhile, Shanahan, a resident of Ireland, has been in Ireland with his life hold. Nobody in Ireland will hire him, he said in an affidavit, because he could be called at any minute to the United States for a retrial. So he has been living on unemployment, which - he said - would be cut off in nine weeks. Then he would have to live off savings, which must go to defense costs, which his Enterasys insurance policy no longer covers.
He already owes $80,000 in legal bills and another $100,000 to a friend who posted his bond.
His two children - ages 11 and 8 - who came to the United States while their father is on trial - have been traumatized by the delay, he said. His daughter in particular “has remained in a constant state of fear that prosecutors will call me back to trial,” panicking each time the phone rings.
The stress of prosecution, he said “has increased significantly since December as I have watched members of my family suffer emotionally and psychologically and as my wife and I find ourselves in an ever increasingly precarious financial situation.”
Good maintains the 162-day delay to inform him that there would be a retrial is in obvious violation of the 70-day speedy trial limitation, especially since prosecutors didn’t file any motions requesting the delay. Good argues that prosecutors - with a weak case to begin with - were intentionally dragging out the case in order to deplete Shanahan’s dwindling resources to mount a defense.
“The lackadaisical attitude … cannot be deemed unintentional,” Good said.
Calls to prosecutors were not returned by NHBR Daily deadline. - BOB SANDERS

This article appears in the May 25 2007 issue of New Hampshire Business Review